To retain employees, create a home-like corporate culture
By Jay MacDonald • Bankrate.com

Remember the old adage, "Good help is hard to find"?

That's especially true for small businesses, most of which can't match the salary and benefit packages of their corporate competitors.

But smaller companies may have an advantage when it comes to creating the kind of work environment that attracts and keeps the best and brightest.

"Retention is just a huge issue right now," says Lisa Audi, compensation specialist with Buck Consulting Inc. in Chicago. "As a result, the workplace is becoming a nicer place. I think that employers are realizing that they need to treat employees well. It's not the past attitude of, 'You're lucky to be here.'"

Carol Geffner, regional vice president of Right Management Consultants in Irvine, Calif., agrees that the patronizing attitude is gone the way of the dinosaur.

"You can't do that anymore," she says. "The people who do that lose their employees."

The cultural revolution
How did a formerly "soft" issue like work environment suddenly move to the top of the CEO's agenda? In a word, turnover.

"The cost of turnover is a tremendous cost," says Audi. Some experts estimate it's about 75 percent for a nonexempt employee and as much as 150 percent for an exempt, factoring in relocation.

"In this economy, for a lot of companies, their main assets are their employees," says Audi. "I think it has reached the executive offices that this is what we need to do to remain competitive."

"I would say it is still a very small percentage of CEOs that truly understand how to implement and build a culture that is geared toward recruiting and retaining," says Geffner. "However, more people are becoming aware of the notion of culture because now it's a business issue. It's about performance."

Nobody is suggesting that free sodas in the break room, health food in the vending machines or music in the cubicles alone will lure in all-star players. But creating a corporate culture that is sensitive and flexible enough to cater to those little touches just might.

"I have had meetings where the client has said their culture is to provide free beverages or once-a-week free lunches and they want to know if it is competitive in the marketplace," says Audi. "You can't really say this is the reason someone will come to an organization or someone will stay, but it does fit into the overall amenities that you get with an organization, and that is becoming more prevalent."

Kenny Kahn, vice president of marketing for Muzak, says the winners in today's recruitment wars will be those companies that pursue a positive corporate culture in the same way one might brand a product.

"Every business wants to create its own unique experience for its employees. They want to create the best corporate culture they can possibly create," he says.

There's no place like home
Looking for a model for the new corporate culture? Start at home.

In human resources lingo, the catch phrase is "work-life balance," shortened to work-life for talking purposes. Employers today increasingly face the work-life issue on two fronts:

• Creative scheduling that allows employees to work more from home; and
• Flexible workplace policies that make the office more like home.

The former can be a strong drawing card for a small business competing against corporate giants. Especially popular today are telecommuting, four-day work weeks, flex time and part-time employment tied to continuous growth that allows workers to take time off to have children or pursue education without sacrificing advancement.

"Looking at the total compensation picture, smaller companies can leverage what they have to offer through flexible arrangements and work-life balance, because they can't always afford to pay as much as a Fortune 500 company," says Audi. "With fewer employees, there is definitely more flexibility in what you can do."

Ironically, says Audi, at some companies today, it is more common to find managers on site than employees. "At a certain level, you just have to be there to have face time with your employees," she says.

From small things, big things come
Smaller companies also may have an edge in creating a work environment with all the comforts of home. In addition to helping retain valuable employees, a homelike corporate culture also may increase productivity.

A small little pop-and-pop shop you may have heard of called Microsoft was built on free caffeine throughout its Redmond, Wash., campus. Some Japanese corporations use aromatherapy to keep workers alert. And background music has been shown to increase productivity by 5 percent, according to a 1996 study published in the April issue of HR Magazine.

Kahn says Muzak no longer touts productivity as a benefit of its product. The company long ago did away with "elevator music" and today offers the world's largest library of original recordings broken down into 10 genres. Most of their 300,000 U.S. customers are small businesses that find the monthly fee well worth it.

"We believe that music is incredibly powerful and the right music will create the right experience at a business," says Kahn. "If an employee is happy and that makes them more productive, that's great. People spend more time at work than they do at home and people love music. Great music is going to have a great impact on how people feel about where they work."

The advantage of these environmental amenities for small businesses may be obvious: most are inexpensive. The key to their effectiveness is making sure they meet employee needs and that top management buys in 100 percent.

"If the CEO is relying on cosmetic environmental additives, whether it be a cappuccino machine or music in the lunch room, it's not going to work," says Geffner. "If you are putting those things in the workplace as a small piece of a larger initiative, then they matter. A small business can't have all the bells and whistles necessarily, but they can do a lot. They can find out what's important to their people, they can walk the talk, and that doesn't cost money."

Audi says the small sums spent on home-life pay big returns in retention.

"If you can't offer the best in terms of pay or benefits, then you have to offer a counterbalance to keep people enthused," she says. "Some people are interested in going where they make the most money or have the best benefits; others are interested in having that balance. High pay can rarely compensate for a negative work environment."

Jay MacDonald is a contributing editor based in Mississippi.

-- Updated: Aug. 14, 2003